Ethereum is the Most Profitable ICO - Research

Investing in initial coin offerings (ICOs) might have seemed like a good idea during the ICO boom, when many projects raised incredible amounts. Now, The Block, a community for crypto and blockchain enthusiasts, have made a list of around 1,750 ICOs from 2014 to 2018 to check how much investors would have made had they invested during the ICO and held on to the tokens.

As authors stress by themselves, the data might be inaccurate since collecting all the info about every single ICO is close to impossible, but it offers valuable insight into the space.

Out of those 1,750 ICOs, 303 (around 17%) were both completed and are being traded on the market. On average, these completed ICOs offer a return of 479% - however, this average is skewed by some large outliers such as Ethereum (59,552.73%, as of September 11) and Spectrecoin (24,400%). Others in this top 10 zone include NEO, Lisk, Augur and Aeternity, all of which boast a return of more than 2,000%. In the case of NEO, this number goes up to more than 11,000%.

Ten best performing ICOs:

Source: The Block. Data from September 11.

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Ten worst performing ICOs

Source: The Block. Data from September 11.

Out of these 303 ICOs that made it to the market, 90 have a positive return, a single one - Telcoin - has no return at all, and the other 212 have actually caused their investors to eventually lose money. Bolenum stands at the bottom of the list with a return of -99.72%, meaning an investor who dropped a single US dollar would now be left with USD 0.003. Still, this shows why the average return is so high: the data is highly skewed by projects that represent original startups within their own space. Thus, as Google would skew the numbers in traditional venture capital calculations, the same happens here with Ethereum.

It must be taken into consideration that the 90 ICOs with a positive return represent only around 5% of all ICOs on the list, compiled by the Block. This means that 95% of all ICOs have a net loss, either through token depreciation or the fact that they’re not traded at all (some exceptions, like Filecoin, are completed but not traded other than via futures).

The Block also offers an explanation for the ICO frenzy of 2017 and part of 2018: a big part would be confirmation bias.

“Investors saw the success for ICOs like Ethereum, NEO, and Augur and tricked themselves into believing that success of these would apply to all ICOs. This analysis demonstrates that is just not true [...] If investors attempt to enter the market because they hear the hype train, they might soon find out that the sound they are hearing is the train leaving, rather than arriving.”

As reported by Cryptonews.com, the amount of money sunk into ICOs shrinking may be old news at this point, but there are good news as well: projects are starting to deliver on their promises, building their products, especially when they have secured funding for years to come.